Thursday, March 27, 2014

The would-be
governors’ campaigns this spring, summer, and fall will likely be taken up with
attacks and counter charges about sound fiscal management and Illinois’
difficult choices. Much of the argument will bounce back and forth
between increasing revenue vs. cutting expenses - both parties claiming that
services can be retained with their respective visions.

In any case, the fiscal issues of Illinois’ structural deficit
will stand center stage.

Governor
Quinn has outlined his position as of Wednesday, March 26th, with some
specificity. Bruce Rauner, the Republican challenger, has decried Quinn’s
outline as “broken promises,” but has yet to flesh out the specifics of his own
approach to the difficulties.

It was not by
accident that Governor Pat Quinn evoked the name of Ronald Reagan the other day
during his budget speech in front of a joint session of the General Assembly
when it came to the Earned Income Tax Credit (EITC).

In fact,
Reagan, although not the architect of the EITC, is often credited (rightfully)
with expanding the program into what we have currently on the federal level
(and subsequently on the state level in Illinois). Indeed, as Governor
Quinn suggested, Reagan was nothing but enthusiasm about the EITC program,
calling it, “the best anti-poverty, the best pro-family, the best job creation
measure to come out of Congress.”

Current Governor Pat Quinn

In truth, it was President Gerald Ford who
first signed off on the concept of an Earned Tax Credit.

Pat Quinn has called for a doubling of
the Earned Income Tax Credit in Illinois. What does that mean?

In short, the
EITC works to provide a tax credit to those who are working, but who fail to
make a living wage - especially families with children. Colloquially:
Instead of providing monetary relief to those who don’t work, the EITC provides
relief to those who have a job but one that does not provide them enough money to
survive as a family/individual.

By the way,
since 2007, that notorious number has been increasing steadily in Illinois as
well as on the national level. The Great Recession has made this single
act (EITC) a lifeline to millions of American families - and the expansions of
the act are set to phase out in 2017.

Don’t think
for a minute that everyone is on board with this program on the federal or
state level; and it will be interesting to see where Mr. Rauner resides when
asked or given the opportunity to explain.

The Earned
Income Tax Credit is expensive. And there are reasons:

Tax credits
do not get figured like tax deductions. In other words, tax credits
directly reduce income tax liability. Okay, that was confusing.
Let’s imagine you have a tax deduction of $300 this year. That would be
figured by your marginal tax rate (the level of taxes you pay). So if you
are in the 33% tax bracket, you’d get back 67% x $300....That would come to about $201.

But a tax
credit is $300 less without any rate, and at a level nearing poverty, that’s
$300 back to you.In other words, even if you
have a $100 tax bill and a $300 tax credit, that's $200 back to you.

See the
difference? It’s more money in the pocket of those who receive EITC’s
than those who use standard deductions (like me). Another difference, of course, is that tax credit money will be spent immediately by impoverished families for food and other essentials.

Challenger Bruce Rauner

The expense is also
why there’s a large coalition of legislators on the federal level who can’t
wait until 2017, and who also argue that we need to eliminate this for any
number of reasons. Some of their charges are as follows:

(1) Low Income Workers end up with no skin in the
game in support of the common good.

(2)EITC redistributes income to people who have
never paid a dime in their lives.

In Illinois,
one (or a family) can only achieve eligibility for an EITC if they have
received such a credit in their federal taxes. After that, as with the
taxes federally, there are many forms and requirements to move through, and
often people seeking an EITC require the assistance of a sound tax
expert. In Illinois and on the federal level, tax assistance is provided
for those who qualify.

EITC Maximum Receivable Credits (2012):

No Children.............................
$475

One Child …………………...$3169

Two Children……...…………$5236

Three Children……....……….$5891

Single
mothers are, as one might have expected, the largest group of recipients for
the EITC, and the legislation is tilted toward helping children.In fact, over half the recipients of relief
in this act are children.

Without
children a single mother can expect (in 2012 numbers) a much smaller potential
amount than one with children. Required income thresholds break the same
way:

Note:On the other hand, in the same year exclusion
of company pension contributions, and earnings reductions on capital gains
& dividends amounted to over $200 billion.

Decisions,
decisions…

Philosophies
will drive the battle for Governor of Illinois this campaign season, make no
mistake about it. And Quinn has called for a doubling of the EITC in
Illinois. What does this mean? Sounds extravagant. Let's take
a look.

On the state
level, one receiving an EITC receives a percentage of what was provided on the
federal level. Up until 2013, qualified impoverished tax-filers could
receive up to 7.5% of the money granted on the federal filing. It was
raised in 2013 to 10% by the Tax Reform & Economic Growth proposal. That
would be maximum of $316 for a single mother with a child in our state.

Quinn wants
to double the EITC payout in Illinois. That same mother may qualify for
$732 in EITC from the state, money that will (according to studies) be destined
to return to the local economy almost instantaneously.

Expensive?
You decide: Nearly 1 million families received EITC relief in Illinois in
2013. Total cost? $160 million.

And yet,
Illinois has an aching need to help a great many of its citizens, especially
those working but without earning the money to make ends meet.

Here's some
sobering information:

(1) 33% of
Illinois citizens live in poverty or near it.

(2) Since
2007, there has been a 3.1% increase in number of Illinois citizens in poverty.

(3) 22% of
children in the state of Illinois live in poverty.

(4) United
States citizens living in poverty total 48.5 million; in Illinois, 1.9 million.

Listen carefully during this voting
season to what these two have to say about what to do fiscally for Illinois.
It affects us, but it could destroy many others.

Note:
Much of the information in this post was gleaned from the Economic Policy Institute
and Illinois’ Government website for those seeking an EITC.

Monday, March 24, 2014

Crain’s
Opinion page had an interesting offer for public sector unions today, March
24th.

“It’s time to talk. A negotiated
agreement is far preferable to one imposed Wisconsin-style.”

Reminds me of
Marlon Brando as Don Corleone making the unions, “an offer they can’t
refuse.” A kind of firm friendliness not usually expected from the
business daily.

The title of
the editorial is straightforward: “The
Primary’s Lesson for the Public Sector Unions.” As titled, the
opinion cautions the recent result of the March 18th Republican primary sends a
notice to Illinois public employee unions that their impact was inconsequential
despite spending “nearly $4 million to
stop GOP candidate Bruce Rauner.” The editorial also cites the Chicago
Teachers Union’s almost $100,000 in “a
failed bid to oust state Rep. Christian Mitchell” as another politically
important indicator.

Crain
hypothesizes that these recent shortcomings are a foreshadowing of the
degenerating impact of unions on our state level. We have become as
vestigial as a shrunken appendix. Note: They conveniently avoid the
Guzzardi win...

The entire
editorial is couched in a carefully worded and very self-serving letter of
concern, like an intervention or bittersweet break-up. A combination of
“It’s not you; it’s me” observation, delivered across the table with about just
as much insincerity.

Like most
such messages, there’s just enough shading to obscure a truckload of truths
while promulgating of lot of the opposite.

According to
Crain’s, the unions’ suing to block the final implementation of SB1 is not only
foolish but wrong-headed, for the unions as much as for the people of Illinois. “...unions preferred solution to
their badly underfunded pensions - significant tax increases - is woefully
short-sighted.”

Crain’s, like the Tribune and other corporate media in Illinois, hang
ownership on the public sector worker organizations for the $32 billion
diverted/taken/stolen from promised pension payments over the last half century.
Even Msall of the Civic Federation has serious doubts about the viability of
the Constitutional inviolability of the SB1, and he holds desperately onto a
very rare and tenuous “police powers” argument in his hopes for legal support
on the highest levels. Much of that some time later.

Without the
unions’ willingness to negotiate, according to Crain’s, they have backed the “big tax hike that will send employers and
middle class families fleeing across the border.”

Suddenly
concerned with the poor, Crain’s also warns that the impoverished will be the
ones saddled with impossible tax burdens, now especially with their houses
underwater.

Very
emotive...but not quite accurate.

Certainly other solutions have been offered to legislators, the
Tribune, and the media for the insurmountable debt in which Illinois now finds
itself. Unfortunately, the tunnel vision of Crain’s and other corporatists
remains blinded to other reliable suggestions: (1) Move to eliminate the
current pension ramp (PA 88-0593) and replace it with an amortized debt
repayment schedule to the pension funds, (2) reform the antiquated, and
flawed flat tax policy and replace it with a fair tax which (betterillinois.com)
will increase the revenues for the state, (3) broaden the tax
services by adding possible or slight increases in services, (4)
eliminate the tax loopholes for the many businesses that receive them in
Illinois or collect them from the Governor on requests, (5)
consider other possible revenue sources, like speculation sales taxes or
reductions in tax increment financing districts.

Not
likely.For Crain’s, the culpable for
the impoverished in Illinois would be the public sector unions.

That’s
simple. That’s convenient. And it changes the narrative a
bit. “It’s you, baby, not me.”

And, in the
end, Crain’s promotes its position as witness to a watershed moment: “But this election proved that the public is
losing patience with the unions’ all-or-nothing position...Don’t play with
disaster when the outlines of a compromise solution are clear: modest increases
in revenue, more realistic cost of living increases on retiree benefits and
higher minimum retirement ages.”

What does
Crain’s editorial group expect? The unions will rescind their suit over
the constitutionality of SB1? They believe that working people will agree
to ignore the words “shall not diminish
or impair” now that we face the very consequences of those words?
Have some respect for your audience, please.

Shoddy
journalism, and specious arguments...and very less than critical
thinking.

Negotiate
now? Case in point, Crain’s endorsement of Rauner on March 2nd as “an
outspoken and energized advocate for the people who pay the freight of in the
state...” demonstrates that neither Crain’s nor Rauner want a union to
negotiate; rather, to roll over and play dead.

Friday, March 21, 2014

I could tell
by Ernesto’s Cheshire smile that he was having a wonderful moment, once again
at my expense.

“Hello, my friend,” he beckoned, waving
his tall cup of Ethiopian coffee and reclining in the leather chair of his
favorite coffee shop, “let me buy you a good cup of coffee for once.”

“Thanks,
Ernesto. Nice of you. What’s the occasion?”

“Why Rauner! Now we will see what
a real Republican can do in Illinois, while you poor union lackeys are left
with such a sorry load of Democrats.”

“Ouch!
But, Ernesto, why would you think I voted Democratic? In fact I received
as many as three phone-voice messages from our union leadership urging me to
vote Republican in the primaries, specifically for Dillard.”

Ernesto was
incensed: “Only unions would sink to such
a lack of credibility, a total abandonment of principle. They’re only in
it for themselves, and this shows it. They’re trying to prevent a true
leader like Rauner from getting into the governor’s office.”

“Not true,
Ernesto. It was actually an attempt, albeit a failure, to get the right
Republican into office. Whew, can’t believe I just said that, Ernesto.”

“Stupid and disgusting unions,” Ernesto muttered.

“Not really,
Ernesto. Somewhat shrewd, really, because the real enemy is Pat
Quinn. One-on-one against Quinn in November, Dillard might easily have
won. In fact, Dillard came close to defeating all of Rauner’s money (and
your deep love of him) in the last weeks before the primary. Dillard
actually closed 9 percentage points despite the untold millions of dollars
Rauner poured into his campaign.”

“That’s only because Dillard was able to
pull in favors like the rest of the politicians down there. Now we’ll see a
real leader who is independent of Springfield and not frightened by the other
politicians.”

“Ernesto, you
are still holding on to the misguided belief that money - like Rauner has - can
buy the office? In actuality, your chances of having a Republican in the
Governor’s mansion were diminished in the watch-wearer’s victory this
week. I am afraid, Ernesto, we are both losing this time, my friend.

“Rauner is
not appreciated south of I-80 at all. In fact, Ernesto, I’d remind you
that his close ties and vacationing with the likes of Rahm Emanuel and his
chummy connections to other Chicago power-brokers will work against him when it
comes to next November. Many people in Illinois do not relish another
part-time visitor from the great city to the north.”

“But he’s not like the loser with the
hairbrush or the clown you call Squeezy. He has promised things people
believe in...like term limits and, better yet, crushing your union bosses.”

“People may
not be quite as uninformed as you would prefer, Ernesto. Government
doesn’t work well in small chunks of time and responsibility, never has.
People in small towns understand government as well as those of us who work in
larger metropolitan areas. We know that governments, small businesses,
and even families do not operate on short, limited expenditures of energy and
responsibility. Imagine short bursts of personal agendas instead of forward vision? Budgets and expenditures and service cost projections
need long-term caretakers and responsible parties to oversee their operation
and to be responsible for the efficacy of their running. Why, if everyone
simply put in their one or two or three terms, they could run away without
consequence. It would also open the frightening dysfunction we see in
Washington now, with people who promote an ideal over an idea. We’d have
a roster of short-timers, Ernesto, like a couple of quickie Senators in
Illinois who are onto the national platform without any real feeling or serious
work for the people in Illinois.”

“Like Obama?”

Touché,
Ernesto. But now the union has the difficult task of possibly switching
allegiance away from an avowed enemy to a very unfriendly and uncooperative
foe. Not a good place to be, Ernesto...a Hobson’s choice, as they say.”

“Well, my friend, I’m with Rauner, if
that means anything to you union people.”

“I’m glad you
are, Ernesto. I guess I’m just a union lackey awaiting orders.
Thanks for the coffee.”

About Me

I am a retiree, political activist, social advocate and community volunteer. I taught at Lyons Township High School in LaGrange for 34 years in the Language Arts classroom and worked as an administrator for several years. My current avocations include various community outreach and assistance programs. Having benefitted from employment in a collegial, reflective teaching environment that encouraged dedication and professionalism, I continue to seek the promotion of education at all levels as a long-term effort combining talent, perseverance, commitment, and constant professional growth - not a blind adherence to a business model of measured production.

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